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The other day Ben Bernanke gave a speech in which he asked and answered five questions about the
Fed:
1. What are the Fed's objectives, and how is it trying to meet
them?
2. What's the relationship between the Fed's monetary policy and
the
fiscal decisions of the Administration and the Congress?
3. What is the risk that the Fed's accommodative monetary policy
will
lead to inflation?
4. How does the Fed's monetary policy affect savers and
investors?
5. How is the Federal Reserve held accountable in our
democratic
society?
I'd have asked only one question, similar to his first, albeit
with a bit of prefacing. This is what I'd love to ask
Bernanke.

The Fed has a very close relationship with the financial sector.
Simple examples of this include:

a. Of the three advisory committees that advise
the Board of Governors of the Federal Reserve directly, even
in theory only one, the Consumer Advisory Council, has a
non-zero number of members who don't directly work for the
financial sector. Regional Federal Reserve Banks are also,
ahem, advised by similar committees made up entirely or
almost entirely by financial institutions and/or
their representatives.b. By design, every one of the Fed's methods for
raising and lowering the money supply require direct
interactions between the Fed and financial institutions.
None of these methods even allow for any direct interactions
between the Fed and members of the public. (Note that
raising and lowering the money supply does not in any
way constitute "regulating the banks.")c. Federally chartered banks and some state
chartered banks are designated "members" of the Federal
Reserve system - no similar appellation or roles apply to
the public at large.d. Federal Reserve banks serve as repository
institutions for member banks, but none of the services
performed by the Fed for banks are
available to the public at large.e. And of course, there is something of a
revolving door between the Fed and the financial
sector.

Given all of this, what would the Fed's objectives be, and how
would it be trying to meet those objectives, if the
interests of the public were given equal weight to the
interests of the financial sector?